[Click to Enlarge] A semi-current look at the spectrum allocations in the U.S. (Source: U.S. FCC)

Spectrum demands are rapidly rising, but its as hard as ever to find free spectrum

While it's easy to put the blame regarding
slower than expected progress in the realm of wireless communications on the
telecoms, they aren't the only problem. Next generation 4G networks are
incredibly spectrum hungry, and even the biggest players like Verizon and
AT&T areracing
to find spectrum.

As a result, their 4G efforts (LTE, WiMAX) are
falling far short of promised speeds -- or worse yet, some are giving up andbilling
even slower HSPA+ networks as "4G"(testing
has shown HSPA+ to be nearly twice as slow ascurrentLTE,
despite T-Mobile's claims and "demos").

The U.S. Federal Communications Commission, the
organization tasked with regulating our nation's communications under thefederalCommunications Act of 1934(amended by Telecom Act of 1996)[PDF], is
struggling to dig up spectrum to sell to the big carriers -- Verizon, AT&T,
Sprint, and T-Mobile -- in order to allow them to better deliver on the their smartphone
data speed promises.

AT&T Inc Chief Executive Randall Stephensonin aReutersreportsays that
is vitally needed as where 10 MHz of spectrum would have lasted four to five
years in the old days, "Today, we'll burn through that in about 10
months."

The great hope for grabbing more spectrum is to
repurpose a couple hundred MHz of unused spectrum and gain another 120 MHz of
spectrum by approach television providers like ABC, NBC, CBS, and Fox and
offering to auction their unused spectrum.

Under the scheme, the networks would pocket part
of the proceeds and the government would keep a chunk too. And the
telecoms would be the biggest winners, as they could finally give customers
faster 3G and 4G data speeds.

However, the proposal for these "voluntary
incentive auctions" must navigate its way through a partisan Congress,
which is divided with a Republican-controlled House of Representatives [homepage] and a Democratic-controlled
Senate [homepage]. Still, there is hope
that both sides of the political spectrum will see the value of this
proposal. States FCC Chairman Julius Genachowski, an appointee of U.S.
President Barack Obama, "Every month that goes by without tackling this is
a month that hurts us from a global competitiveness perspective."

Even if the auction succeeds, it does not solve
the underlying fact that we are running out of usable spectrum. That
means that dreams ofwirelessly
connected vehicles, appliances, and more may see slower adoption. It
also prohibitively raises the barrier to entry into the U.S. telecommunications
market, virtually guaranteeing it to be an oligarchy composed of the big four
-- Verizon, AT&T, Sprint, and T-Mobile (ranked from first to fourth,
respectively, in number of subscribers). The only solutions here will be
to find new ways to use spectrum more efficiently and perhaps find ways to make
the use of previously "junk" spectrum financially and technically
feasible.

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Mergers between major telecoms wouldn't help much in the most congested areas. If ATT ate VZW (or vice versa) the new company would have double the spectrum; but also double the customers trying to use it; a zero sum situation. It might help a bit in rural areas where double the number of customers would make upgrades to new generations pay for themselves sooner; but probably not much. Assuming VZW rolls out LTE everywhere so they can repeat their largest network claim with 4g ATT could just as easily buy roaming access for their users.

The only way a major telecom merger could free spectrum up usefully would be to buy a rival with a different legacy platform and phase it out. That would be a very long term option though, Sprint still hasn't been able to shut down the iDen network despite merging with Nextel 6 years ago. part of the problem is regulatory in that they had to agree to keep it up for several years to avoid screwing existing customers; from then it was cheaper in the short term to keep both running than to have part of their spectrum much more heavily loaded then the rest, and there'd be a major backlash from customers who bought new iDen phones as well.